27 May 2012

Japan and China to start direct currency trading - reports

10:53 am on 27 May 2012

Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment.

It will be the first time China has allowed a major currency except the American dollar to directly trade with the yuan.

Japan's Kyodo News agency says exchange rates between the yen and the yuan will be determined by their transactions.

The move departs from the current cross rate system that involves the US dollar in setting yen-yuan rates.

The new exchange system would help businesses in the world's second- and third-largest economies reduce risks associated with exchange rate fluctuations in the US dollar and cut transaction costs.